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Technology Stocks : Nortel Networks (NT) -- Ignore unavailable to you. Want to Upgrade?

To: Qualified Opinion who wrote (14373)	1/24/2005 6:13:17 AM
From: elmatador	Respond to of 14638

LGE, Nortel agree to form joint venture LG Electronics Inc. has agreed to mint a joint venture with Canadian telecom equipment maker Nortel Networks Corp., a move that could help the Korean company strengthen its position in the global mobile telephony market. According to a memorandum of understanding signed by the companies yesterday, Nortel will control 50 percent plus one share in the joint venture, tentatively named LG-Nortel Networks, with LG Electronics controlling the remaining stock. "LG Electronics will transfer its existing telecom equipment and network systems division into the joint venture, where we could take advantage of Nortel's technological advancements and international market channels. Our company mainly focuses on developing mobile-phone products, so we are not worried about any contradictions between the business sectors of the two companies," said Kim Ssang-soo, chief executive and vice-chairman of LG Electronics, at a Seoul news conference alongside Nortel CEO Bill Owens. The new company will focus on developing and marketing telecom equipment and network solutions mainly for wireless telephony, optical networks and end-to-end broadband. The company will have a "strong focus" initially on the Korean market, said Owens, with Nortel seeking to increase its market share and establish a stronger framework to compete in Asia's wireless markets. Last week, Nortel was talking with Chinese equipment maker China Putian Corp. to develop and market mobile-phone equipment. Nortel generated about 13 percent of its revenue from the Asia-Pacific region last year, according to company officials. In 2001, Nortel failed to win a telecom equipment contract from mobile-phone operator KT I-com, later acquired by KT Freetel Co., in competition with LG Electronics, Samsung Electronics Co. and Motorola Inc. among others. Its lack of a handset division was suggested as a weak point. "The partnership allows us to demonstrate our commitment to this marketplace, as it is imperative for us to expand our market share and compete in Asia," said Owens. LG Electronics will appoint the chief executive officer of the new company while the chief financial officer will be named by Nortel. The companies said the deal will be completed in the second quarter of this year but declined to comment on the value or where the joint venture will be based. LG Electronics, the world's fifth-largest mobile-phone maker, hopes the joint venture will enable the company to promote its CDMA based products to a larger audience worldwide through Nortel's sales network. LG Electronics said last year it will seek to sell its telecom equipment division or set up a joint venture with a foreign partner, with the sector's profitability lagging behind its handset business. Telecom equipment generated LG Electronics around 782 billion won ($705 million) in revenue last year, nearly 8.6 percent of the 9 trillion won the company earned in total through its telecommunication business. LG Electronics has been talking with Nortel since August for the establishment of a joint venture. (thkim@heraldm.com)